India's Reliance halts future oil and gas drilling

17th October 2011, Comments 0 comments

India's energy giant Reliance Industries is to suspend drilling for future oil and gas exploration pending a reassessment with its new venture partner BP, a company source told AFP on Monday.

The source said India's largest private oil explorer is "re-evaluating" its exploration and production strategy in partnership with the British company.

"With BP as our strategic partner it makes sense to do a fresh review of our portfolio and come back with a new strategy," the source added, without specifying a timeframe for when new drilling would restart.

Reliance, controlled by India's richest man Mukesh Ambani, recently concluded a $7.2 billion deal with BP, selling it a 30 percent stake in 21 of its oil and gas fields off the Indian coast.

The Indian firm on Saturday said that its second-quarter net profit jumped nearly 16 percent to 57.03 billion rupees ($1.2 billion) from 49.23 billion rupees in the same period a year ago.

The increase was helped by strong fuel refining margins which offset lower gas output from its fields.

Reliance shares have fallen nearly 27 percent this year due to concerns over falling output from the main D6 gas fields it operates in the Krishna-Godavari basin off eastern India.

Last month, India's upstream oil and gas regulator said Reliance was producing 44 million standard cubic metres per day (mscmd) from its main exploration field, well below the 60 mscmd it produced a year earlier.

Reliance is India's most valuable company with the heaviest weightage on the Bombay Stock Exchange's benchmark Sensex index.

Reliance hopes BP's deepwater drilling expertise will increase output from its hard-to-exploit deepwater reserves. BP, meanwhile, will benefit from access to new hydrocarbon resources and markets.

India imports about 80 percent of its crude oil and has been frantically trying to find new fuel sources as the country's economy grows.

© 2011 AFP

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